Article supplied by REINZ 21 April 2020
REINZ has welcomed the announcement by the Reserve Bank of New Zealand that it is undertaking a consultation to temporarily remove Loan to Value Ratios (LVRs) as a response to the COVID-19 pandemic – particularly for first time buyers.
Bindi Norwell, Chief Executive at REINZ says: “Since LVRs were introduced in 2013, first time buyers have found it extremely difficult to save a 20% deposit – especially as house prices have continued to rise significantly over the last 7 years. Many first time buyers report having to save for years in order to reach that threshold, and when you’re talking about places such as Auckland, it can take in excess of 15 years for a couple on an average salary to save a 20% deposit.
“First time buyers have found themselves in a really difficult situation during COVID-19 with the portion of their KiwiSaver fund able to be used for a first home purchase being at a much lower value than many had expected. Therefore, the proposal by the Reserve Bank to remove LVRs, albeit for a limited period of time, will go a long way towards helping first time buyers to get onto the market,” continues Norwell.
“It is interesting to note that the Reserve Bank’s proposal doesn’t appear to make any distinction between first time buyers, owner occupiers or investors. This is welcome news as COVID-19 is negatively impacting so many people from a financial perspective around the country,” points out Norwell.
“As always, we would remind people to take a prudent approach to any borrowing, to ensure they are not over leveraged in the long term,” concludes Norwell.